Absent an agreement to the contrary, parties become entitled to an interest in the value of property acquired by the other spouse after the date of marriage. However, in the case of the matrimonial home, special rules apply. Reading sections 4 and 5 of the Family Law Act together, the matrimonial home will not be subject to deduction or an exclusion in calculating the value of a spouse’s assets upon divorce. In other words, if spouse ‘A’ brings the matrimonial home into the marriage and subsequently divorces spouse ‘B’, the full value of the matrimonial home will be divided; there will be no deduction of the pre-marital interest of spouse ‘A’. This may be particularly alarming for very short-term relationships. Section 5 of the Family Law Act provides a means of remedying this scenario in certain circumstances of unconscionability:
5 (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (1).
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(6) The court may award a spouse an amount that is more or less than half the difference between the net family properties if the court is of the opinion that equalizing the net family properties would be unconscionable, having regard to,
(e) the fact that the amount a spouse would otherwise receive under subsection (1), (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years….
Section 5 is saying that when the parties are separating and equalizing their property, a court has the power to order an unequal division of assets provided that the result would be unconscionable otherwise. According to paragraph 5(6)(e), this may occur when the parties have cohabited for less than five years. Thus, in the example provided above, spouse ‘A’ could theoretically apply for an unequal division of the matrimonial home if the relationship is less than five years old.
Cases like Smith v Smith, 2012 ONSC 1116 reiterate the process to establish this exception:
The Ontario Court of Appeal described the steps that must be undertaken when a request for a variation of the equalization payment is made pursuant to section 5(6) of the Family Law Act in Serra v. Serra [2009 ONCA 105]. As indicated in that decision, the court must first ascertain the parties' respective net family properties applying the principles set out in section 4 of the Act, and must then determine what the equalization payment would be pursuant to section 5(1) of the Act. Finally, before making an order for equalization under section 5(1), the court must decide whether ordering an equalization of the net family properties would be "unconscionable" having regard for the factors outlined in section 5(6).
The onus is on the party seeking a variation of the equalization payment under section 5(6) to establish that a variation is warranted. In order to succeed under the section, the party seeking a variation must bring their case within one or more of the subparagraphs of section 5(6). Once it is established that the case engages one or more of the factors set out in those subparagraphs, the court must then determine whether the implications of those factors considered in light of the overall factual context of the case at hand are such that an equalization of net family properties would be unconscionable. The factors outlined in section 5(6) need not be considered in isolation. The unconscionability of an equalization payment can arise as a result of multiple factors.
As in the example provided at the beginning of this post, a relationship of less than five years falls into one of the prescribed categories (i.e. the fact that the amount a spouse would otherwise receive under subsection (1), (2) or (3) is disproportionately large in relation to a period of cohabitation that is less than five years…). As such, the example meets this initial test and would proceed to the threshold for establishing unconscionability:
The threshold for establishing "unconscionability" under section 5(6) is exceptionally high. The test is not met by showing that equalization would lead to hardship to one spouse, or by the fact that an equalization payment would leave the parties with a different net worth. Nor is it met by simply demonstrating that an equalization of net family properties would be unfair, harsh, inequitable or unjust. In order to satisfy the test of unconscionability, the circumstances of the case must be such that equalization would be "repugnant to anyone's sense of justice," or that it would "shock the conscience of the court."
Abdulhadi v. Ahmad, 2019 ONSC 215 provides a fulsome example of this provision in application to a relationship where the cohabitation period was less than five years:
Mr. Ahmad seeks an unequal division of the NFP pursuant to subsection 5(6)(e) of the Family Law Act…
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I find that Mr. Ahmad and Ms. Abdulhadi cohabited, within the meaning adopted by the Ontario Court of Appeal, from September 9, 2013 until March 2, 2015, or slightly less than 18 months. They, therefore, fall easily within the ambit of section 5(6)(e) of the Act.
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In his decision in Millward, Justice Fedak of the Ontario Superior Court of Justice reviewed a number of cases of short marriages, predominantly from British Columbia, and came to the conclusion that it would be "unconscionable and unfair to allow for any equalization payment" based on a number of factors, including, inter alia, that the marriage only lasted eleven and a half months, the house was owned by the husband prior to marriage, the wife's debts were significantly reduced after the marriage, the upkeep and maintenance of the home was done exclusively by the husband during the marriage, and the court ordered spousal and child support to be paid by the husband for one year.
Gomez and Millward are both distinct from the case at bar; here, the matrimonial home was purchased, albeit by Mr. Ahmad, during the marriage as opposed to having been brought into the marriage. Nevertheless, Justice Fedak's review of McLean v. McLean [1990 CarswellBC 211 (B.C. S.C.)], Abrahmian v. Abrahamian and Sidhu v. Sidhu in Millward reveals that the length of cohabitation is a very significant factor in the unconscionability analysis.
With respect to the issue of unconscionability, the Ontario Court of Appeal has said in the case of Serra v. Serra, 2009 ONCA 105 (Ont. C.A.), at paragraph 47:
[47] In this regard, the threshold of "unconscionability" under s. 5 (6) is exceptionally high. The jurisprudence is clear that circumstances which are "unfair", "harsh" or "unjust" alone do not meet the test. To cross the threshold, an equal division of net family properties in the circumstances must "shock the conscience of the court".
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At paragraph 57, Blair, J. A. noted: "Judicial discretion with respect to equalization payments is therefore severely restricted, by statutory design, but it is not eliminated altogether since there is discretion to order an unequal payment where "the court is of the opinion that equalizing the net family properties would be unconscionable".
Would it be unconscionable to order an equal division in the case at bar? The Cambridge Dictionary defines unconscionable as "morally unacceptable"; the Oxford Dictionary defines it as "not right or reasonable"; and the Merriam-Webster Dictionary defines it at "shockingly unfair or unjust".
Mr. Ahmad went to Iraq to marry Ms. Abdulhadi in October of 2011. He knew of her educational background and her unilingual capacity. He expected or must have expected to provide for her upon her immigration to Canada. He bought a house, which closed after the marriage, in anticipation of her coming. He brought her precisely to share in what he had, and to start a family. Everything Mr. Ahmad did was, in fact, in keeping with the stated objectives of the Preamble of the Family Law Act, - to create a family unit and partnership with Ms. Abdulhadi.
Having said that, it was Mr. Ahmad who exclusively contributed to the acquisition and maintenance of the matrimonial home, the parties' only significant asset. Ms. Abdulhadi did contribute to her and Mehdi's needs through her access to the Child Tax Benefit, that is until Mr. Ahmad unilaterally terminated that access. She also did household chores and duties to the point of her departure, completely unaware that Mr. Ahmad had in the interim sold the house out from under her. Ms. Abdulhadi also contributed to the family through her primary care of Medhi during the marriage.
Given the above, including that I have ordered at least four more years of spousal support, and that Mr. Ahmad and Ms. Abdulhadi only cohabitated for 18 months, I find that Mr. Ahmad has met the "exceptionally high" threshold that an equal distribution of the net family properties would be unconscionable. Having so found, the Court of Appeal dictates in Serra that I determine an amount that is "fair, just and equitable". Ms. Abdulhadi's contribution must be acknowledged. I have found that her entitlement to an equalization payment is $26,325.10. The parties cohabited for 18 months or approximately one third of the time period referred to in s. 5(6)(e) of the FLA. Ms. Abdulhadi shall, therefore, received an equalization payment of $8775.00.
In this case, the court seemed to be persuaded by the fact that the husband “exclusively contributed to the acquisition and maintenance of the matrimonial home, the parties' only significant asset” and that the parties “only cohabitated for 18 months”. Additionally, in a Motion following a decision of unequal property division, Booth v Bilek, 2020 ONSC 21116 set out reasons for unconscionability in the particular case:
That issue was given extensive consideration by Justice Miller. She properly identified the governing legal test and the applicable case law. She recognized that the threshold for unconscionability is very high. She then considered the many relevant factors, the vast majority of which were undisputed. In particular, she noted:
The parties were married for 3.5 years and cohabited for less than one additional year;
There are no children of the marriage;
The disparity in their ages (at trial he was 69, she was 46);
Ms. Bilek did not have a "traditional role" within the marriage, as she had no childcare or household management responsibilities;
Ms. Bilek received $199,302 — half the value of the matrimonial home - to which she had made no direct contribution;
Her sole financial contribution was to pay for approximately 10% of the renovations to the first matrimonial home;
The $16,000 in improvements she did contribute came from a condominium which Mr. Booth entirely financed before the marriage;
The difference in net family properties was almost entirely attributed to the growth in Mr. Booth's investments over the course of the marriage, which he had not contributed to during the marriage;
The investments comprise the bulk of what Mr. Booth has to live on in his retirement.
In sum, Justice Miller concluded, on solid ground, that Ms. Bilek was "much better off financially" than she was upon entering the marriage, with "little if any financial contribution on her part".
It therefore appears that Miller J. did precisely what was required under s. 5(6) of the Family Law Act. She looked carefully at the backgrounds and marital contributions of both parties, determined that an equal division would be "unconscionable", and fixed what she regarded as a reasonable figure. I see very little, if any, merit to the appeal and find there is no serious question to be tried.
In the case above, in addition to factors such as being a short-term marriage and one spouse having made no monetary contribution to the matrimonial home, the court seemed to imply that the absence of kids was also significant. In other words, if the parties have children living in the matrimonial home, the court may have been more willing to be hesitant to divide the property equally. The question becomes, if unconscionability is the result, what is the appropriate equalization amount? Gomez v McHale, 2016 ONCA 318 provides guidance:
The appellant contends that the motion judge erred by not following a mathematical formula for calculating the unequal division of net family property. Section 5(6)(e) of the FLA applies when cohabitation is less than five years. In several cases, courts have looked at the actual period of cohabitation (e.g. 48 months) and then fixed an unequal division of net family property using that period as a percentage of the five year statutory period, i.e. 48/60 = 80 per cent): see, for example, Sarcino v. Sarcino, [1999] O.J. No. 902 (Ont. Gen. Div.) and Kucera v. Kucera (2005), 16 R.F.L. (6th) 250 (Ont. S.C.J.).
We do not accept this submission. Although a mathematical formula may be of assistance in some cases, we do not think that the motion judge erred by not applying it in this case. He did what s. 5(6) of the FLA requires. He looked carefully at the backgrounds of both parties, determined that an equal division would be "unconscionable", and fixed what he regarded as a reasonable figure. We see no error in the motion judge's approach.
In other words, the court has extensive discretion in deciding what the unequal equalization payment should be. However, a mathematical approach may be a good starting point for parties who are looking for some degree of predictability before commencing proceedings. But the court will not necessarily use a formula. A more fulsome explanation is provided in Booth v Bilek, 2021 ONCA 128:
Having concluded that full equalization would be unconscionable, the trial judge ordered the respondent to pay the appellant 10% of the full amount.
The appellant argues that the trial judge did not explain how she arrived at the figure of 10%, and that the reasons in this respect prevent meaningful appellate review.
Furthermore, the appellant argues that the trial judge did not give appropriate weight to the length of the marriage. She contends that the trial judge ought to have applied a formula that pro-rates the equalization payment according to the length of cohabitation. As the parties cohabited for 52 months, the appellant argues that any unequal division should be calculated at 87% of full equalization (52/60 months), which would entitle the appellant to $92,458.80.
We do not agree that the trial judge made any error in the exercise of her discretion. Although applying a mathematical formula based on the length of the marriage provides the benefit of certainty, neither the Act nor relevant case law requires the trial judge do so. As this court held in Gomez v. McHale 2016 ONCA 318, 79 R.F.L. (7th) 305, at paras. 11-12:
In several cases, courts have looked at the actual period of cohabitation (e.g. 48 months) and then fixed an unequal division of net family property using that period as a percentage of the five year statutory period, i.e. 48/60 = 80 [percent])
. . . .
Although a mathematical formula may be of assistance in some cases, we do not think that the motion judge erred by not applying it in this case. He did what s. 5(6) of the FLA requires. He looked carefully at the backgrounds of both parties, determined that an equal division would be "unconscionable", and fixed what he regarded as a reasonable figure. We see no error in the motion judge's approach.
Similarly, it was not an error for the trial judge to reason as she did, and not to apply the mathematical formula proposed by the appellant. Contrary to the appellant's argument, the trial judge's conclusion was neither unreasoned nor unjustified. Paragraph 37, which contains a bare statement of the trial judge's conclusion, is not the whole of the analysis and must not be read as though it were unconnected to the preceding paragraphs that first recite the trial judge's factual findings and then analyze the parties' obligations using the criteria set out in s. 5(6). The trial judge's ultimate conclusion — that the appellant is entitled to 10% of full equalization — was a reasoned conclusion flowing from the findings that preceded it. Her findings give an ample basis for understanding why she chose not to apply a mathematical formula, as was done in Zheng v. Xu2019 ONSC 865Ont. S.C.J. , 23 R.F.L. (8th) 436. The facts of that decision, although involving the dissolution of a marriage of similar duration, is dissimilar in many other relevant respects. Unlike in Zheng, the appellant's only financial contribution to the matrimonial home (or any other family property) came from property that she had first received as a gift from the respondent. To have applied the time-weighted approach in this case would have required the trial judge to ignore the relevant differences between the two cases.
When parties are in a short-term marriage, the results of the marriage breakdown may be inequitable insofar as equalization goes. For instance, if a party brings the matrimonial home into the marriage and the other spouse has not contributed anything to it or for it, in certain circumstances it might look like a significant windfall to the receiver spouse if the parties divide the home 50/50. The Family Law Act provides for the ability to apply for unequal division of equalization in a number of cases, included when the period of cohabitation is less than five years. The main question is whether the result would be unconscionable if an order for unequal division was not granted. In determining this, the court has the discretion to look at the entire context of the situation. Often, courts will examine the length of the cohabitation as well as the level of contribution of the assets, in making this determination. Recent cases suggest that courts do not need to apply a mathematical formula in determining the quantum of unequal division; instead, the court can apply their discretion so long as they give a sufficient explanation for the unequal amount that they have reasoned and awarded.
